If one word describes most venture capital firms, especially in the Triangle, since the “dot com” bust 15 years ago, it’s “glacial.”

However, there’s a major exception to the rule: Cofounders Capital.

Serial investor David Gardner and his team at Cofounders Capital made their 13th investment in less than two years earlier this week, backing ServusConnect with $350,000.

The firm has placed some $4 million in new and emerging companies, sometimes alone or as part of a syndicate. (Cofounders also offers much more than cash with office space and support at its “Labs” in Cary.) Cofounders follows Gardner’s example. He invested millions across the Triangle before deciding to launch his own fund.

To find out what’s happening at CoFounders and what it looks for in making deals, The Skinny caught up with partner Tim McLoughlin for a Q&A. We talked first about why back Servus, how the deal represents what Cofounders looks for, and much more.

  • Why invest Servus?

CFC had been working with the Servus team for almost a year before we made an investment. We were extremely impressed with the founder’s ability to iterate on the product and identify the customer profile that their solution brought the most value to.

As far as the market goes, there has been a lot of progress in the property management space on customer facing tools such as payment portals, but very little investment in technology for maintenance workflow. When CFC interviewed their early beta customers we realized that their world had been transformed by Servus when they transitioned from a manual paper work order process to a mobile and web solution that allowed management complete visibility across their property portfolio.

  • How does this investment typify the kinds of investments Cofounders wants to support?

As far as our typical investments, Servus fits right in our wheelhouse. It is a B2B software that provides a solution that is better, faster, cheaper than the process it is replacing.

Bio: David Gardner, Founder, Investor and General Partner

David Gardner is a serial entrepreneur, writer, adviser and very early stage investor with nearly thirty years of experience in creating and building software technology companies.

Before founding Cofounders Capital he was the Triangle’s most active and involved angel investor with over $7M personally deployed in early stage ventures. As an adviser, David spent all of his time working as a full-time unpaid coach and mentor to startup companies usually in the software space.

As an entrepreneur, David has been the founder or cofounder of multiple successful companies in the Triangle including PeopleClick which was purchased for $100M and Report2Web which sold for $12M in less than eleven months from inception. He has demonstrated a record for consistency across multiple industries and markets with six successful exits in a row.

As a senior executive, David served as a Vice President for Compuware, a billion dollar Fortune 1000 corporation, after it acquired ProviderLink, a healthcare communications exchange he founded.

As a writer and thought leader, David is author of a popular book on entrepreneurship called, The StartUp Hats. He has published many articles and forward thinking white papers on technical, marketing and managerial topics. David founded and launched the first hosted software-as-a- service enterprise application in NC long before the SaaS model was recognized as a viable architecture or best practice.

As a lifelong learner, David is constantly researching new technologies and challenging traditional ways of thinking. In addition to several years of full time computer science and business related post graduate studies at NCSU, he holds degrees in Music and Philosophy with a post graduate concentration in theology and dead languages.

What drives David today is his passionate for helping smart, coachable first-time entrepreneurs, watching them succeed and witnessing their life-changing exits.

Source: Cofounders Capital

We like selling to enterprise customers, and before we made our investment Servus proved that they could bring tremendous value to some of the largest property management companies in the space. We were the first venture fund in the deal, and we felt that our hands on approach with our portfolio companies could significantly “move the needle” for Servus.

  • What are the essential ingredients/qualities an entrepreneur must have to draw your firm’s interest?

It may sound cliche, but they have to be coachable. We see multiple plans and meet with multiple entrepreneurs every single day. Some of them are too entrenched with their current idea or product and won’t let the market dictate the changes they need to make to build a successful company.

We have seen a lot of pitfalls for early stage software companies and always try to share that knowledge and help prevent what could be critical early mistakes. Entrepreneurs also need the ability to execute on a plan. Setting up 5 or 10 sales calls or demos with no refereneceable customers is a daunting task, but the most successful entrepreneurs we work with are not thwarted by some early rejection and find a way to make it happen.

  • What then will be the deciding factors in making a deal after due diligence?

Most of our diligence process is helping the companies build their business. We go on a lot of sales calls while in diligence and help the founders iterate on their pitch or product. If we get a lot of “Nos” from customers in the diligence process, that is OK, we just need to really understand what the true objections are.

As long as the entrepreneurs are coachable and able to execute, the market is large enough and addressable enough, and there are no red flags with the background checks and references then we typically feel comfortable enough making an investment.

  • What are key tips Dave/your firm would make to all those startups seeking investors?

Do not look for an immediate “yes” from investors. In the first few meetings we are getting to know each other, because this really will be a long term business relationship.

If an investor makes introductions for you, or gives you some “homework” to execute on after the meeting, you absolutely have to follow up on all of it.

On the flip side, the entrepreneurs need to make sure they are comfortable with the investors and feel that the investors can add value. When startups part with precious equity in their company, they should be sure they are always getting more than money.

The Cofounders Capital deal list

Date, startup, amount invested, round (if lead, noted)

  • Feb, 2017:ServusConnect $350k, Seed (Lead) —
  • Oct, 2016: Myxx Inc $400k, Seed, (Lead) —
  • Oct, 2016 : Urban Offsets, $300k, Seed (Lead) —
  • Sep, 2016: Tesser Health, $450k, Seed —
  • Sep, 2016: ParkMyCloud, $1.65M, Seed (Lead)
  • Jun, 2016: FokusLabs, $300k, Seed (Lead) —
  • Jan, 2016: Savii Inc., $460k, Seed —
  • Dec, 2015: EmployUs, $750k, Seed (Lead) —
  • Dec, 2015: FilterEasy, $3M, Series A —
  • Oct, 2015: RewardStock, $350k, Seed —
  • Sep, 2015: Canopy, $1.5M, Seed —
  • Aug, 2015: Factivate, undisclosed amount, Venture —
  • Jul, 2015: Testive, $2.16M, Venture

Source: Cofounders Capital